In addition to that above information, you learn that the accounting department had the following total costs for the past 16 months for each of the following:

Total Cost of paychecks processed $180,100.00
Total cost of maintaining customer accounts 109,600.00
Total cost of performing special analyses 120,000.00
Total fixed cost (total for 16 months) 550,250.00
Total cost $959,950.00

Required:

A. What is the cost per unit for (1) paychecks processed, (2) customer accounts maintained, and (3) special analyses performed?

B. Assuming the following level of cost-driver volumes for a month, what are the accounting department's estimated costs of doing business using the account analysis approach?
1. 1,000 paychecks processed
2. 200 customer accounts maintained
3. 3 special analyses

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Solution Summary

Your solution is highlighted in yellow on the attached excel spreadsheet. Click on the cells to see the computations. I have calculated a rate for each of the three activities using the 16 month history. I did not round the rate (you can if you wish to re-compute for submitting for credit). I then computed a month's cost by multiplying the activity for the month times the rates and adding in expected fixed cost (1/16 times the amount given).